Finance minister Arun Jaitley feels we are largely a "tax non-compliant society". To correct it, he proposed a simple one page form to file some individual tax returns and a reduction in the rate of the lowest taxable income slab. There is a sense of deja vu about these proposals. Two decades ago P Chidambaram's budget speech prefaced significant cuts in tax rate with surprise at India's small tax base. Subsequently, Yashwant Sinha introduced a one page form dubbed "Saral". Even if they have proven elusive so far, simplicity and low rates are goals that we must pursue. But better tax compliance also needs another measure: data mining.

To put the issue in global context, America's IRS has a modernisation and information technology division which was established for the organisation's core activities. Using IT as an essential tool to gather accurate information on spending and investment patterns is at the heart of a modern tax department's effort to deter tax evasion. An increasing number of transactions leave an electronic trail somewhere in the chain which links production to consumption. Digital India should start with government as the tax department has accessed data from banks and financial entities for years without impressive results.

The fundamental problem is a piecemeal approach within government to digitisation. Departments function in silos and there is no coherent vision. But enormous amounts of financial data are already there with government; in addition, demonetisation has generated fresh leads. It can safely be assumed that if government is unable to expand the tax base in future, the primary cause will be its inability to get its digitisation strategy right. Bringing government machinery into the 21st century is the answer, rather than a simplistic war on cash which has its legitimate purposes.

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